William enters into a 5-year interest rate swap with a notional amount of 40,000 and annual settlement period. William wants to pay a fixed rate and receive a floating rate based on the yield curve below. The variable interest rate during each one-year settlement period will be the one-year spot interest rate at the start of the settlement period. Compute the fixed interest swap rate that he should pay. Years to maturity 1 2 3 4 Spot rate 4.00% 4.50% 5.25% 6.25% 7.50% Possible Answers 5.70% B 6.40% 7.20% D 8.10% E 9.30%